Question: Carl and Sheila have been married for nine years. For the past five years, they have lived in the house Sheila owns on Catalpa Ct. In August 2016, Carl purchased the house from Sheila for $325,000. Her adjusted basis for the house is $150,000. No closing costs are incurred.
- Carl and Sheila continue to live in the house until March 2017 when Carl sells it for $410,000. Selling expenses are $15,000. Carl and Sheila file separate returns in 2017.
- Determine if Carl is eligible for the § 121 exclusion and, if so, what is the amount of the exclusion? Also what is his recognized gain?